tax planning

  • Noelle Merwin
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Paying Interest? Here Are 4 Types You May Be Able to Deduct
Paying Interest? Here Are 4 Types You May Be Able to Deduct 266 266 Noelle Merwin

Personal interest expense generally can’t be deducted for federal tax purposes. There are, however, exceptions. Here are four, one of which is a new break under the One Big Beautiful Bill Act (OBBBA), which was signed into law in 2025.

1. Mortgage interest

Perhaps the most well-known interest expense deduction, home mortgage interest may be deductible if you itemize deductions rather than claiming the standard deduction. You generally can deduct interest on mortgage debt incurred to purchase, build or improve your principal residence and a second residence. Points paid related to your principal residence also may be deductible.

The OBBBA made permanent the Tax Cuts and Jobs Act’s (TCJA’s) reduction of the mortgage debt limit from $1 million to $750,000 for debt incurred after December 15, 2017, with some limited exceptions. But the OBBBA also generally made mortgage insurance premiums deductible as mortgage interest — though not until the 2026 tax year. So you can’t deduct these premiums on your 2025 return.

2. Auto loan interest

The OBBBA allows eligible individuals — whether or not they itemize — to deduct some or all of the interest paid on a loan taken out after 2024 to purchase a qualifying new car, minivan, van, SUV, pickup truck or motorcycle with a gross vehicle weight rating under 14,000 pounds. For 2025 through 2028, you can potentially deduct up to $10,000 each year. But various requirements and limits apply.

One of the most significant requirements is that the vehicle’s “final assembly” must occur in the United States. An important limit to be aware of is that the deduction is phased out starting at $100,000 of modified adjusted gross income (MAGI) or $200,000 for married couples filing jointly. The deduction is completely phased out when MAGI reaches $150,000 ($250,000 for joint filers).

3. Student loan interest

If you have student loan debt, you may be able to deduct the interest, subject to various rules and limits. You don’t have to itemize to claim the deduction, and the maximum deduction is $2,500. The interest must be for a “qualified education loan,” which means a debt incurred to pay tuition, room and board, and related expenses to attend a post-high-school educational institution, including certain vocational schools. Post-graduate programs may also qualify.

For 2025, the deduction begins to phase out for single taxpayers when MAGI exceeds $85,000 ($175,000 for joint filers). The deduction is unavailable for single taxpayers with MAGI of more than $100,000 ($205,000 for joint filers). Married taxpayers must file jointly to claim this deduction. Taxpayers who can be claimed as a dependent on another tax return aren’t eligible.

4. Investment interest

Investment interest — interest on debt used to buy assets held for investment, such as margin debt used to buy securities — may be deductible. But you can’t deduct interest you incurred to produce tax-exempt income. For example, if you borrow money to invest in municipal bonds, which are exempt from federal income tax, you can’t deduct the interest.

Perhaps more significant, your investment interest deduction is limited to your net investment income, which, for the purposes of this deduction, generally includes taxable interest, nonqualified dividends and net short-term capital gains, reduced by other investment expenses. In other words, qualified dividends and long-term capital gains aren’t included (unless you elect to treat them as nonqualified dividends or short-term capital gains subject to the higher tax rates that apply to those types of income). Any disallowed interest is carried forward. You can then deduct the disallowed interest in a later year if you have excess net investment income.

What interest can you deduct?

If you’re wondering whether you can claim any interest expense deductions on your 2025 return, please contact us. We can calculate your potential deductions and help you determine if there are steps you can take this year to maximize your deductions when you file your 2026 return next year.

To learn more, contact your Smolin representative.

 

  • Noelle Merwin
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Letter of Instruction: The Missing Piece in Your Estate Plan
Letter of Instruction: The Missing Piece in Your Estate Plan 266 266 Noelle Merwin

Including a letter of instruction in your estate plan is a simple yet powerful way to communicate your personal wishes to your family and executor outside of formal legal documents. While not legally binding, the letter can serve as a road map to help those managing your estate carry out your wishes with fewer questions or disputes.

Contents of your letter

What your letter addresses largely depends on your personal circumstances. However, an effective letter of instruction must cover the following:

Documents and assets. State the location of your will and other important estate planning documents, such as powers of attorney, trusts, living wills and health care directives. Also, provide the location of critical documents such as your birth certificate, marriage license, divorce documents and military paperwork.

Next, create an inventory — a spreadsheet may be ideal for this purpose — of all your assets, their locations, account numbers and relevant contacts. These may include, but aren’t necessarily limited to:

  • Checking and savings accounts,
  • Retirement plans and IRAs,
  • Health and accident insurance plans,
  • Business insurance,
  • Life and disability income insurance, and
  • Stocks, bonds, mutual funds and other investment accounts.

Don’t forget about liabilities. Provide information on mortgages, debts and other loans your family should know about.

Digital assets. At this point, most or all of your financial accounts may be available through digital means, including bank accounts, securities and retirement plans. It’s critical for your letter of instruction to inform your loved ones on how to access your digital accounts. Accordingly, the letter should compile usernames and passwords for digital financial accounts as well as social media accounts, key websites and links of significance.

Funeral and burial arrangements. Usually, a letter of instruction will also include particulars about funeral and burial arrangements. If you’ve already made funeral and burial plans, spell out the details in your letter.

This can be helpful to grieving family members. You may want to mention particulars like the person (or people) you’d like to give your eulogy, the setting and even musical selections. If you prefer cremation to burial, make that abundantly clear.

Provide a list of people you want to be contacted when you pass away and their relevant information. Typically, this will include the names, phone numbers, addresses and emails of the professionals handling your finances, such as an attorney, CPA, financial planner, life insurance agent and stockbroker. Finally, write down your wishes for any special charitable donations to be made in your memory.

To learn more, contact your Smolin representative.

 

  • Noelle Merwin
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Protect Your Estate and Your Family with Co‑Executors
Protect Your Estate and Your Family with Co‑Executors 266 266 Noelle Merwin

Choosing an executor is one of the most important decisions in the estate planning process. This person (or institution) will be responsible for carrying out your wishes, managing assets, paying debts and taxes, distributing property to beneficiaries and more.

Your first instinct may be to name your spouse, adult child or other close family member as executor. While that decision may feel natural, it’s not always the best choice. Co-appointing a professional advisor alongside a trusted family member can provide a more effective and balanced solution.

An executor’s duties

Your executor has a variety of important duties, including:

  • Arranging for probate of your will and obtaining court approval to administer your estate (if necessary),
  • Taking inventory of — and collecting, recovering or maintaining — your assets, including life insurance proceeds and retirement plan benefits,
  • Obtaining valuations of your assets where required,
  • Preparing a schedule of assets and liabilities,
  • Arranging for the safekeeping of personal property,
  • Contacting your beneficiaries to advise them of their entitlements under your will,
  • Paying any debts incurred by you or your estate and handling creditors’ claims,
  • Defending your will in the event of litigation,
  • Filing tax returns on behalf of your estate, and
  • Distributing your assets among your beneficiaries according to the terms of your will.

For someone without financial, legal or tax expertise, these responsibilities can feel overwhelming — especially while grieving. Even highly capable family members may lack the time or experience needed to administer an estate efficiently.

Mistakes can result in delays, disputes or even personal liability. Executors are legally responsible for acting in the best interests of the estate and its beneficiaries. If errors occur — such as missed tax deadlines or improper distributions — the executor may be held accountable.

Emotional dynamics can complicate matters

When a family member serves as sole executor, emotional tensions can arise. Sibling rivalries, blended family dynamics or disagreements about asset values can quickly escalate.

Even when everyone has good intentions, beneficiaries may question decisions about timing, asset sales or expense payments. The executor may feel caught between honoring the deceased’s wishes and preserving family harmony. Needless to say, these situations can strain relationships, sometimes permanently.

Two can be better than one

A practical alternative is to name both a trusted family member and a professional advisor, such as a CPA, estate planning attorney or corporate fiduciary, as co-executors. This structure can offer several key benefits, such as:

Technical expertise. A professional advisor can bring knowledge of tax law, probate procedures, accounting requirements and regulatory compliance. This reduces the risk of costly mistakes and helps ensure deadlines are met.

Objectivity. A neutral third party can help mediate disagreements and make decisions based on fiduciary standards rather than emotions. This can protect family relationships and minimize conflict.

Shared responsibility. Administering an estate can be time consuming. Dividing responsibilities allows the family member to focus on personal matters while the professional handles technical and administrative tasks.

Continuity and stability. If a family member becomes overwhelmed, ill or otherwise unavailable, a professional co-executor can provide continuity. Estates often take months — or even years — to settle.

A balanced approach

Co-appointing a professional doesn’t mean excluding family involvement. In fact, it often enhances it. The family member remains involved in decision-making and ensures that your personal wishes and family values are honored. Meanwhile, the professional ensures that legal and financial matters are handled efficiently and correctly.

For larger or more complex estates — such as those involving business ownership, multiple properties or significant investments — this collaborative model can be especially valuable. Contact a Smolin representative if you have questions about having co-executors or choosing them.

 

  • Noelle Merwin
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Tax News: Form 1040 refunds
Tax News: Form 1040 refunds 266 266 Noelle Merwin

IRS Refund Delays: What You Need to Know

Missing direct deposit information could delay your tax refund by six weeks or more.

The IRS has begun issuing CP53E notices to taxpayers who requested refunds but did not include bank account information for direct deposit on their 2025 Form 1040.

When bank information is missing from Form 1040, the IRS must issue a paper check instead of a direct deposit, resulting in significant refund delays and unnecessary follow‑up.

How to Avoid Delays

If you are expecting a refund, be sure your bank account information is included when your tax return is prepared. Direct deposit is the fastest way to receive your refund. Additionally, always review your Form 1040 carefully to ensure accuracy.

To learn more about CP53E notices and how to avoid refund delays, visit Understanding your CP53E notice.

If you have questions or need assistance, please contact your Smolin representative.

  • Noelle Merwin
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A Tax Decision Every Married Couple Should Revisit for 2025
A Tax Decision Every Married Couple Should Revisit for 2025 266 266 Noelle Merwin

Married couples have a choice when filing their 2025 federal income tax returns. They can file jointly or separately. What you choose will affect your standard deduction, eligibility for certain tax breaks, tax bracket and, ultimately, your tax liability. Which filing status is better for you depends on your specific situation.

Minimizing tax

In general, you should choose the filing status that results in the lowest tax. Typically, filing jointly will save tax compared to filing separately. This is especially true when the spouses have different income levels. Combining two incomes can bring some of the higher-earning spouse’s income into a lower tax bracket.

Also, some tax breaks aren’t available to separate filers. The child and dependent care credit, adoption expense credit, American Opportunity credit and Lifetime Learning credit are available to married couples only on joint returns. And some of the new tax deductions under 2025’s One Big Beautiful Bill Act (OBBBA) aren’t available to separate filers. These include the qualified tips deduction, the qualified overtime deduction and the senior deduction.

You also may not be able to deduct IRA contributions if you or your spouse were covered by an employer-sponsored retirement plan such as a 401(k) and you file separate returns. And you can’t exclude adoption assistance payments or interest income from Series EE or Series I savings bonds used for higher education expenses if you file separately.

However, there are cases when married couples may save taxes by filing separately. An example is when one spouse has significant medical expenses. Medical expenses are deductible only to the extent they exceed 7.5% of adjusted gross income (AGI). If a medical expense deduction is claimed on a spouse’s separate return, that spouse’s lower separate AGI, as compared to the higher joint AGI, can result in a larger total deduction.

Couples who got married in 2025

If you got married anytime in 2025, for federal tax purposes you’re considered to have been married for all of 2025 and must file either jointly or separately. And married filing separately status isn’t the same as single filing status. So you can’t assume that filing separately for 2025 will produce similar tax results to what you and your spouse each experienced for 2024 filing as singles, even if nothing has changed besides your marital status — especially if you have high incomes.

The income ranges for the lower and middle tax brackets and the standard deductions are the same for single and separate filers. But the top tax rate of 37% kicks in at a much lower income level for separate filers than for single filers. So do the 20% top long-term capital gains rate, the 3.8% net investment income tax and the 0.9% additional Medicare tax. Alternative minimum tax (AMT) risk can also be much higher for separate filers than for singles.

Liability considerations

If you and your spouse file a joint return, each of you is “jointly and severally” liable for the tax on your combined income. And you’re both equally liable for any additional tax the IRS assesses, plus interest and most penalties. That means the IRS can come after either of you to collect the full amount.

Although there are “innocent spouse” provisions in the law that may offer relief, they have limitations. Therefore, even if a joint return results in less tax, some people may still choose to file separately if they want to be responsible only for their own tax. This might occur when a couple is separated.

Many factors

These are only some of the factors to consider when deciding whether to file jointly or separately. Contact a Smolin Representative to discuss the many factors that may affect your particular situation.

  • Noelle Merwin
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Smolin Relocates Spring Lake Heights Office to Expanded Red Bank Location
Smolin Relocates Spring Lake Heights Office to Expanded Red Bank Location 266 266 Noelle Merwin
Smolin, Lupin & Co., LLC announces the relocation of its Spring Lake Heights office to its newly expanded Red Bank location. This strategic move supports the firm’s continued growth and strengthens its ability to serve clients.

Effective February 1, the Spring Lake Heights team joined the Red Bank office, now located on the third floor at:
331 Newman Springs Road
Suite 130
Red Bank, NJ 07701

This relocation strengthens collaboration, expands resources, and ensures the firm continues to deliver the responsive, high quality service clients rely on. The new, modernized space offers increased capacity and improved efficiencies, enabling Smolin to better support our client needs across the region.

“As our firm grows, it is essential that our teams are positioned to collaborate effectively and have access to the tools and environment necessary to support our clients,” said Paul Fried, CPA, CEO. “This move reflects our long-term commitment to delivering exceptional service and enhancing the client experience.”

Smolin is excited to welcome clients to the new office. Clients with questions regarding the move are encouraged to contact their Smolin advisor directly.

 

  • Noelle Merwin
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New Trump Accounts – What You Need to Know
New Trump Accounts – What You Need to Know 266 266 Noelle Merwin

Included in the One Big Beautiful Bill (OBBB) signed into law July 4, 2025 was the creation of a tax-advantaged savings account for children called “Trump accounts”. A Trump account is treated like an IRA with the following stipulations:

  • Must be created for the exclusive benefit of an individual who has not reached age 18 by the end of the year.
  • Must be designated as a Trump account at the time it is established.
  • No contributions will be accepted before July 4, 2026.
  • No distribution will be allowed before the year in which the beneficiary reaches age 18.
  • Contributions are limited to $5,000 per year, adjusted annually for inflation after 2027.
  • Employers can contribute up to $2,500 annually (adjusted annually for inflation after 2027) to a Trump account of an employee or an employee’s dependents that will be excludible from the employee’s gross income.
  • A one-time payment of $1,000 will be made by the Treasury to a Trump account for a child born during the period January 1, 2025 – December 31, 2028 if an election is made on the parents Form 1040 for the year of birth. This is referred to as a “Pilot Program Contribution”.
  • To open a Trump account for an eligible dependent child, new Form 4547 can be e-filed with Form 1040. Form 4547 can also be paper filed if so desired.

The IRS has announced that once the Treasury Department verifies that a Trump account was opened, the $1,000 of “seed money” for children born in 2025 will hit the accounts sometime after July 4, 2026. Michael and Susan Dell announced in December that they will personally be donating $6.25 billion to fund Trump accounts – $250 for 25 million children under age 11 in lower-income areas with median family income of $150,000 or less. Various large companies including Bank of America, Charles Schwab, Comcast, IBM, JPMorgan Chase and Wells Fargo have announced they will match the $1,000 contribution for the children of their employees.

Additional information can be found at www.trumpaccounts.gov.

When medical expenses are — and aren’t — tax deductible
When medical expenses are — and aren’t — tax deductible 266 266 Lindsay Yeager

If you had significant medical expenses last year, you may be wondering what you can deduct on your 2025 income tax return. Income-based thresholds and other rules can make it hard to claim the medical expense deduction. At the same time, more types of expenses may be eligible than you might expect.

Limits on the Deduction

Medical expenses are deductible only if they weren’t reimbursable by insurance or paid via tax-advantaged accounts (such as Flexible Spending Accounts or Health Savings Accounts). In addition, they’re deductible only to the extent that, in aggregate, they exceed 7.5% of your adjusted gross income (AGI).

For example, if your 2025 AGI was $100,000, your eligible medical expenses during the year would have to total more than $7,500 for you to claim the deduction — and only the amount in excess of that floor would be deductible. If you had $10,000 in eligible expenses, your potential deduction would be $2,500.

In addition, medical expenses are deductible only if you itemize deductions. For itemizing to be beneficial, your itemized deductions must exceed your standard deduction. Due to changes under the Tax Cuts and Jobs Act that were made permanent by last year’s One Big Beautiful Bill Act (OBBBA), many taxpayers no longer itemize.

However, some taxpayers who hadn’t been itemizing recently may benefit from itemizing for 2025 because of the OBBBA’s quadrupling of the state and local tax deduction limit. If you fall into that category, you should also revisit whether you can benefit from the medical expense deduction on your 2025 income tax return.

What Expenses are Eligible?

If you do expect to itemize deductions on your 2025 income tax return, now is a good time to review your medical expenses for the year and see if you had enough to exceed the 7.5% of AGI floor. Eligible expenses include many costs besides hospital and doctor bills. Here are some other types of expenses you may have had in 2025 that could be deductible:

Transportation. The cost of getting to and from medical treatment is an eligible expense. This includes taxi fares, public transportation or using your own vehicle. Your vehicle costs can be calculated at 21 cents per mile for medical miles driven in 2025, plus tolls and parking. Alternatively, you can deduct certain actual vehicle-related costs, including gas and oil, but not general costs such as insurance, depreciation and maintenance.

Insurance premiums. The cost of health insurance is a medical expense that can total thousands of dollars a year. Even if your employer provides you with coverage, you can deduct the portion of the premiums you paid — as long as it wasn’t paid pretax out of your paychecks.

Long-term care insurance premiums also qualify, subject to dollar limits based on age. Here are the 2025 Limits:

  • 40 and under: $480
  • 41 to 50: $900
  • 51 to 60: $1,800
  • 61 to 70: $4,810
  • Over 70: $6,020

Therapists and nurses. Services provided by individuals other than physicians can qualify if they relate to a medical condition and aren’t for general health. For example, the cost of physical therapy after knee surgery qualifies, but the cost of a personal trainer to help you get in shape doesn’t. Also qualifying are amounts paid for acupuncture and those paid to a psychologist for medical care. In addition, certain long-term care services required by chronically ill individuals are eligible.

Eyeglasses, hearing aids, dental work and prescriptions. Deductible expenses include the cost of glasses, contacts, hearing aids, dentures and most dental work. Purely cosmetic expenses (such as teeth whitening) don’t qualify, but certain medically necessary cosmetic surgery is deductible. Prescription drugs qualify, but nonprescription drugs such as aspirin don’t, even if a physician recommends them.

Smoking-cessation programs. Amounts paid to participate in a smoking-cessation program and for prescribed drugs designed to alleviate nicotine withdrawal are deductible expenses. However, nonprescription gum and certain nicotine patches aren’t.

Weight-loss programs. A weight-loss program is a deductible expense if undertaken as treatment for a disease diagnosed by a physician. This could be obesity or another disease, such as hypertension, for which a doctor directs you to lose weight. It’s a good idea to get a written diagnosis. In these cases, deductible expenses include fees paid to join a weight-loss program and attend meetings. However, foods for a weight-loss program generally aren’t deductible.

Dependents and others. You can deduct the medical expenses you pay for dependents, such as your children. Additionally, you may be able to deduct medical expenses you pay for an individual, such as a parent or grandparent, who would qualify as your dependent except that he or she has too much gross income or files jointly. In most cases, the medical expenses of a child of divorced parents can be claimed by the parent who pays them.

Determining if you can Benefit

After reviewing this list of eligible expenses, do you think you had enough in 2025 to exceed the 7.5% of AGI floor? Or do you have questions about whether specific expenses qualify? Contact a Smolin Representative. We can determine if you can benefit from the medical expense deduction — and other tax breaks — on your 2025 income tax return.

How auditors evaluate accounting estimates
How auditors evaluate accounting estimates 266 266 Lindsay Yeager

Financial statements aren’t built solely on fixed numbers and historical facts. Many reported amounts rely on accounting estimates — management’s best judgments about uncertain future outcomes. Estimates are inherently subjective and can significantly affect reported results. How do external auditors evaluate whether amounts reported on financial statements seem reasonable?

Understanding Management’s Assumptions and Data

External auditors pay close attention to accounting estimates during audit fieldwork. They review the methods and models used to create estimates, along with supporting documentation, to ensure they’re appropriate for the specific accounting requirements. In addition, auditors examine the company’s internal controls over the estimation process to ensure they’re robust and designed to prevent errors or manipulation.

For instance, they may inquire about the underlying assumptions (or inputs) used to make estimates to determine whether the inputs seem complete, accurate and relevant. Estimates based on objective inputs, such as published interest rates or percentages observed in previous reporting periods, are generally less susceptible to bias than those based on speculative, unobservable inputs. This is especially true if management lacks experience making similar estimates.

Challenging Estimates and Assessing Bias

When testing inputs, auditors assess the accuracy, reliability and relevance of the data used. Whenever possible, auditors try to recreate management’s estimate using the same assumptions (or their own). If an auditor’s independent estimate differs substantially from what’s reported on the financial statements, the auditor will ask management to explain the discrepancy. In some cases, an external specialist, such as an appraiser or engineer, may be called in to estimate complex items.

Auditors also may conduct a “sensitivity analysis” to see if management’s estimate is reasonable. A sensitivity analysis shows how changes in key assumptions affect an estimate, helping to evaluate the risk of material misstatement.

In addition, auditors watch for signs of management bias, such as overly optimistic or conservative assumptions that could distort the financial statements. They also consider the objectivity of those involved in the estimation process, ensuring there’s no undue influence or pressure that could affect the estimate’s outcome.

Assessing the Accuracy of Prior Estimates to Inform Current Judgments

Auditors also may compare past estimates to what happened after the financial statement date. The outcome of an estimate is often different from management’s preliminary estimate. Possible explanations include errors, unforeseeable subsequent events and management bias. If management’s estimates are consistently similar to actual outcomes, it adds credibility to management’s prior estimates. But if significant differences are found, the auditor may be more skeptical of management’s current estimates, necessitating the use of additional audit procedures.

Why Estimates Matter

Accounting estimates are a key focus area for auditors because small changes in management’s assumptions can have material effects on a company’s financial statements. Through rigorous testing, professional skepticism and independent analysis, auditors can help promote accurate, reliable financial reporting.

As audit season gets underway for calendar-year businesses, now’s a good time to review significant accounting estimates and address gaps in documentation. Taking these proactive measures can help streamline the audit process and reduce the risk of unnecessary delays. Contact a Smolin Representative with questions or for assistance preparing for your audit.

Tax Filing FAQs for Individuals
Tax Filing FAQs for Individuals 266 266 Lindsay Yeager

The IRS is opening the filing season for 2025 individual income tax returns on January 26. This is about the same time as when the agency began accepting and processing 2024 tax year returns last year, despite IRS staffing having been significantly reduced since then. Here are answers to some FAQs about filing.

When is my 2025 return due?

For most individual taxpayers, the deadline to file a 2025 return or an extension is April 15. Individuals living outside the United States and Puerto Rico or serving in the military outside those two locations have until June 15.

When must 2025 W-2s and 1099s be provided to me?

To file your tax return, you need all your Forms W-2 and 1099. February 2 is the deadline for employers to issue 2025 W-2s to employees and, generally, for businesses to issue Forms 1099 to recipients of any 2025 interest, dividend or reportable miscellaneous income payments (including those made to independent contractors).

Normally these forms must be furnished by January 31. But this year, that date falls on a Saturday. So the deadline is the next business day, which is Monday, February 2.

If you haven’t received a W-2 or 1099 by the deadline, contact the entity that should have issued it. But remember that if a form is provided to you via mail instead of digitally, February 2 is the postmark deadline. So you might not receive it until several days after that.

Are there benefits to filing early?

One benefit is that if you’re getting a refund, you’ll likely get it sooner. The IRS expects to issue most refunds in less than 21 days from filing, as it has in recent years.

However, it’s possible that the reduced IRS staffing could cause delays during tax season this year. Other factors could also impact refund timing. The IRS cautions taxpayers not to rely on receiving a refund by a certain date, especially when making major purchases or paying bills.

How can filing early reduce my tax identity theft risk?

Tax identity theft occurs when someone uses your personal information — such as your Social Security number — to file a fraudulent tax return and claim a refund in your name. One of the simplest yet most effective ways to protect yourself from this type of fraud is to file your tax return as early as possible.

The IRS processes returns on a first-come, first-served basis. Once your legitimate return is in the system, thieves will have a tougher time filing a false return under your identity.

What’s the impact of the paper check phaseout for refunds?

As required by Executive Order 14247, the IRS is phasing out paper tax refund checks for individual taxpayers. For the 2025 tax year, the IRS will request banking information on all tax returns when filed to issue refunds via direct deposit or electronic funds transfer (EFT). For taxpayers without bank accounts, options such as prepaid debit cards, digital wallets or limited exceptions will be available.

Direct deposits and EFTs generally speed up refunds. They also avoid the risk that a paper check could be lost, stolen or returned to the IRS as undeliverable.

If I file early and owe tax, will I have to pay it when I file?

Even if you file early, your deadline for paying tax owed is April 15. However, if you didn’t pay enough in withholding and estimated tax payments for 2025 to meet certain rules (or didn’t make estimated tax payments on time), you could still owe penalties and interest. Paying before April 15 may reduce them.

What if I can’t pay my tax bill in full by April 15?

If you don’t pay what you owe by April 15, you’ll likely be subject to penalties and interest even if you met the withholding and estimated tax payment requirements for 2025. You should still file your return on time (or file for an extension) because there are failure-to-file penalties in addition to failure-to-pay penalties.

Paying as much as possible by April 15 will reduce interest and penalties because a smaller amount will be outstanding. Then request an installment payment plan for the rest of the liability.

Under what circumstances can I file for extension?

Generally, anyone is eligible to file an automatic extension to October 15 for individual tax returns; you don’t have to provide a reason why you can’t file on time. But you must file Form 4868 to request the extension by April 15 to avoid being subject to a failure-to-file penalty.

Remember that an extension of time to file your return doesn’t grant you any extension of time to pay your taxes. You should estimate and pay any taxes owed by April 15 to help avoid, or at least minimize, late payment penalties and interest.

What should I do next?

Contact a Smolin Representative to answer any other tax filing questions you have or to discuss getting started on your 2025 return. We can prepare your return accurately and on time while helping to ensure you claim all the tax breaks you’re entitled to.

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